Free Trade — Ask The Right Questions

Does free trade create jobs? This is the wrong question. Of course new trade agreements create jobs. The right question is do they create more jobs than they kill, and are those new jobs good-paying jobs? Will the agreements be used to break unions and pressure US workers to accept lower wages, as past agreements have? Do these agreements let a company move a factory outside the borders and protections of our democracy and then bring the goods back here to sell? There are other questions that need to be asked.

The United States is considering whether to enter into more “free trade” agreements, this time with South Korea, Panama and Columbia. The advocates say these agreements will open new markets, creating jobs and opportunities. The critics say our past trade agreements have hurt our economy and killed jobs and we don’t need more of that.

Senator Richard Lugar and Indiana pork producer Danita Rodibaug, chair-elect of the U.S. Meat Export Federation make the case for these agreements, in Exports aid job creation here at home, which appeared in yesterday’s Fort Wayne Journal Gazette,

When you realize that 95 percent of the world’s consumers live outside our borders, it is clear that international trade is vital to a vibrant U.S. economy. Trade supports American jobs – plain and simple.

Trade is especially important to the U.S. agricultural sector. For example, the United States exports roughly 15 percent of our corn production, 45 percent of our soybean production, and 25 percent of our pork production. Indiana alone exports nearly $370 million of meat and meat products each year. And we have some real opportunities to increase and expand these agricultural exports, creating more jobs at home.

The market is large,

These three free trade agreements offer great potential to expand U.S. exports. In its recent analyses, the Department of Agriculture estimated that these three agreements would increase U.S. agricultural exports by $46 million, $371 million and $1.9 billion, respectively, per year after full implementation.

And involves jobs,

But these agricultural exports don’t just benefit those on the farm – those exports create jobs across the U.S. economy. According to the USDA, every $1 billion in agricultural exports supports more than 8,400 jobs in the United States. That means that more than 1.1 million jobs were supported by exports last year.

Representatives of two textile firms in Georgia State of the US have expressed opposition to the US-Korea Free Trade Agreement (FTA) fearing reduction in jobs.

They say that the implementation of the FTA would put 12,000 direct textile workers and another 40,000 jobs in the textile supply chain at risk, because of the weak customs enforcement, and the unequal tariff phase-outs.

Further, China, being adjacent to Korea, can easily get its goods relabeled in Korea if the FTA comes into force. It would benefit China, besides creating jobs in Korea at the cost of American jobs, they say.

Textile companies have been wiped out by previous agreements, and the see more jobs lost from these. And they bring up some more good questions,

A report prepared for the US Senate Finance subcommittee states that the US would lose around 250,000 jobs when the FTA is fully effective.

Presently, US products are subjected to very high Korean tariffs, up to 6.6 percent on non-agricultural items and up to 54 percent on agricultural items. If these tariffs are eliminated under the FTA, it is argued that it would benefit the US.

The tariffs imposed by the US on Korean goods is very small, 3.2 percent and 9 percent on non-agricultural goods and agricultural goods, respectively.

Good question: why do we currently have an arrangement where Korea charges a very high tariff on our goods, while we let their goods in with a low tariff?

Laura Askelin, president of the Southeast Minnesota Labor Council, said members of her union have been writing letters to the editor and organizing rallies to urge lawmakers to oppose the free trade agreements in Panama, Colombia and Korea. These local mobilizations are part of the AFL-CIO’s nationwide push against the agreements.

“Jobs are shipping oversees, and we’re not getting jobs here because of the trade deals,” Askelin told the Minnesota Independent. “We’re definitely feeling it here in rural Minnesota.”

Minnesota has lost about 90,000 manufacturing jobs in the last decade, according to the Minneapolis/St. Paul Business Journal. At least 13,700 Minnesota manufacturing jobs were lost because of NAFTA, according to an Economic Policy Institute (EPI) study this year.

. . . While unions like the AFL-CIO are pushing against the Korea Free Trade Agreement, hundreds of corporations are pulling for it in the U.S.-Korea FTA Business Coalition, which includes Minnesota companies like Target and 3M. The Huffington Post also points to a number of other groups that are lobbying for the agreement, including the National Association of Manufacturers, the American Farm Bureau, the Business Roundtable, the Financial Services Roundtable and the Retail Industry Leadership Association.

The free trade agreements have been delayed by the debt ceiling debate at the Capitol. They aren’t expected to be introduced until after the August congressional recess, although supporters of the agreements are hopeful of earlier passage as Senate Republicans throw their weight behind the trade deals.

The three major free trade agreements Congress will soon consider are being promoted as a big win for American workers. But take a good look at who’s lobbying for them most enthusiastically, and it becomes evident that the biggest winners will be giant multinational corporations — and the countries on the other end of the deals.
The agreements would knock down any number of barriers and regulations currently limiting the unfettered flow of capital and goods between the U.S. and three countries: Korea, Colombia and Panama.

The agreements would ideally bring greater trade and wealth to all four economies; they would offer U.S. financial services huge new opportunities, while lowering costs for the nation’s mega-retailers.

And they could potentially send hundreds of thousands more American jobs overseas.

… Ground zero for the free-trade lobby is the U.S.-Korea FTA Business Coalition, a group convened by the U.S. Chamber of Commerce and led by the top lobbyists for Boeing, Chevron, Pfizer, Goldman Sachs and Citigroup. The group’s central lobbying argument is that the deal will “create new American jobs and opportunities for economic growth by immediately removing barriers to U.S. goods and services in Korea.”

The biggest of the big-business coalitions — the National Association of Manufacturers, the Business Roundtable, the Financial Services Roundtable, the American Farm Bureau, Big Pharma and the Retail Industry Leadership Association — are all lobbying hard as well, along with a slew of individual mega-corporations.

… “It’s not a fair fight,” agreed Michael Stumo, president of the Coalition for a Prosperous America, which counts among its members the owners of companies that produce brass, chemicals and machine tools. “It’s the transnationals versus the domestic producers and domestic manufacturers,” he said.

All The Wrong Groups In Support

So it looks like all the wrong groups — the “usual suspects” — support these treaties: the anti-worker groups, that have exported jobs, killed unions and driven down middle-class wages. Wall Street. The big multi-nationals. The Chamber of Commerce. Draw your own conclusions.

Between 1962 and 2009, the cumulative trade deficit of the United States almost exactly equaled the cumulative Federal budget deficit: 7,426 billion for the budget deficit, a couple of billion less for the trade deficit. That is, when you add up all the deficit numbers for those 28 years, both the trade deficits and the budget deficits have generated the same amount of red ink. The Republican House members, in particular, use fear-mongering to convince the public that the federal budget deficit is going to destroy the economy. But what about the trade deficit?

We can close the trade deficit by engaging in a serious industrial policy, one which will pull the manufacturing sector back up by rebuilding the infrastructure to prevent the worst of global warming and wean us away from oil, as I have argued. If, for instance, the government guarantees a 20 year infrastructure rebuilding program, that might help to convince the banks and corporations that it is prudent to invest the 2 trillion dollars that they are currently sitting on. They would know that they had a market for the output of their investments, and they would be assured that American workers would have the purchasing power to buy their output.

Congress and the White House are intent on ramming through three job-killing trade agreements. That’s why you need to tell your senators and representatives to stop the South Korea, Panama and Colombia free trade agreements and get to work promoting job growth in the United States, rather than offshoring American jobs. Click here to send them a message now.

AFL-CIO President Richard Trumka says that similar trade deals like NAFTA, which has cost nearly 700,000 jobs and created a $97 billion trade deficit with Mexico, have been “a miserable failure for working people” and

these new deals follow in NAFTA’s footsteps. Working people need to make our voices heard—and we need to fight hard. We need to be creating jobs—not passing agreements that will offshore more jobs and leave more communities behind.

About Dave Johnson

Dave has more than 20 years of technology industry experience. His earlier career included technical positions, including video game design at Atari and Imagic. He was a pioneer in design and development of productivity and educational applications of personal computers. More recently he helped co-found a company developing desktop systems to validate carbon trading in the US.